January 08, 2018

Suze Orman Says 70 is the Correct Retirement Age

If I resurrected "How Am I Doing?" today, I'd be handing out plenty of failing grades to anyone who thinks they will be able to retire before they turn 70. Yes, you heard me right: 70 is the new retirement age—not a month or year before.

She goes on to elaborate:

Look, I totally get that if you are reading MONEY you're probably a diligent saver. But it's always dangerous to assume you're better off than you really are. You likely have plenty saved up to breeze through 15 years or so of retirement. But, people, if you stop working in your 60s, your retirement stash might need to support you for 30 years, not 15.

Then she details her three steps to retirement:

Step 1: Delay Tapping Social Security Until 70Step 2: Lay the Foundation Now to Work Longer LaterStep 3: Truly Enjoy a Secure Retirement

Several thoughts on this one:

For most Americans, she's probably right. Why? Because they don't save like they should while working. They spend too much and save too little, which ends up meaning you need to work longer.

That said, if you manage your money correctly, you can retire -- and retire quite well -- waaaaaay before 70. I did it at 52 and could have retired almost a decade earlier quite comfortably.

If I was stuck at retiring at 70, I'd be very, very depressed.

Even if you're "older" (like in your 40s or 50s) and haven't saved much, there's still a way you can retire before 70. For details check out this post on how to retire in ten years.

Comments

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I think the situation may be worse-- many of those who retire at 70 will have to accept a lower standard of living than they enjoyed before they retired. The propensity to overspend likely won't diminish as one approaches retirement age, my guess is that a lifetime habit becomes ingrained, so a step down is baked in for most.

Very few Americans are willing to execute on the very high rates of saving that are needed to reach their retirement number in their 40s or 50s. Those who do can safely ignore Suze's advice. But even retiring at age 70 is no cake-walk for most, it also requires considerable preparation, and I think Suze's advice seems reasonable here.

One quibble I have is that the word "savings" isn't in her article at all! I would elaborate on that one line "But for many of you who've done a great job planning, part-time work may be all that you need." and spell out that if you can manage at least a moderate sustained savings rate, the work income you'd need in your 60s would be commensurately reduced.

I work in engineering and it's by no means certain that I will be able to work in my field in my 60s.